Imagine owning pieces of companies that have raised their dividends every year for 25 years or more. The best dividend aristocrats to buy today offer this rare mix of reliability and growth. These top companies have made it through tough times like recessions and market crashes. They keep rewarding their shareholders with growing income.
There are 69 dividend aristocrats in the S&P 500, but not all are the same. Some of the top dividend aristocrats stocks are selling at big discounts but offer great yields. For example, healthcare giants like Becton Dickinson are trading at just 75% of their fair value. Consumer staples leaders like Clorox are at 70% of fair value, and industrial powerhouses like Air Products and Chemicals are at 86% of fair value.
The market today offers special buying chances in many sectors. For those looking for income, PepsiCo offers nearly 4% yield, and Amcor almost 6%. Tech dividend aristocrats like Automatic Data Processing and FactSet Research give a peek into growing sectors while keeping their aristocrat status.
Key Takeaways
- Clorox trades at the deepest discount among aristocrats at 70% of fair value with a 4.37% yield
- Amcor offers the highest yield at 5.87% while trading at just 74% of fair value
- Healthcare aristocrats Becton Dickinson and West Pharmaceutical both trade at 75-76% of fair value
- Consumer defensive plays like Kimberly-Clark yield 4.93% at attractive valuations
- Technology aristocrats Automatic Data Processing and FactSet Research provide growth with stability
- PepsiCo combines a 3.94% yield with global brand strength at 87% of fair value
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Understanding Dividend Aristocrats and Their Investment Appeal
Looking for reliable income from your investments? S&P 500 dividend aristocrats are top picks for wealth building. These companies have shown dedication to their shareholders with decades of steady dividend growth. They’re perfect for those seeking both income and stability.
What Defines a Dividend Aristocrat
To be called a dividend aristocrat, a company must meet certain criteria. It must be in the S&P 500 index, have a market cap of at least $13.1 billion, and raise its dividend every year for 25 years. Today, about 65 companies, like Coca-Cola and Procter & Gamble, hold this honor.
Why Dividend Aristocrats Attract Long-Term Investors
There are many reasons to invest in these stocks. They offer steady income that grows faster than inflation. During tough times, they tend to hold up better than the market. Your returns get a boost from both dividend payments and possible price increases, leading to strong growth over time.
The Difference Between Dividend Aristocrats and Dividend Kings
Dividend aristocrats need 25 years of dividend increases, while dividend kings require 50+ years. Kings don’t have to be in the S&P 500, so you can invest in companies like Lancaster Colony. Aristocrats offer high immediate income, while kings provide unmatched reliability in dividends.
| Category | Years Required | S&P 500 Member | Number of Companies |
|---|---|---|---|
| Dividend Aristocrats | 25+ years | Yes | 65 |
| Dividend Kings | 50+ years | Not Required | 48 |
How to Identify the Best Dividend Aristocrats to Buy
Finding the right long-term dividend growth stocks needs a clear plan. Look for companies with strong market positions and good prices. The ProShares S&P 500 Dividend Aristocrats ETF (NOBL) is a great place to start. It lists all companies that have raised dividends for 25 years or more.
Key Screening Criteria for Quality Dividend Aristocrats
Start by checking economic moat ratings. Companies with wide economic moats usually keep their dividends steady. Look for those trading below their fair value to get better returns.
| Company | Moat Rating | Current Discount | Fair Value Target |
|---|---|---|---|
| Clorox | Wide | 30% | $163 |
| Brown-Forman | Wide | 25% | $37 |
| Amcor | Narrow | 26% | $60 |
| Becton Dickinson | Narrow | 25% | $270 |
Evaluating Economic Moats and Competitive Advantages
Wide-moat companies like PepsiCo and Automatic Data Processing have strong market positions. They have advantages like strong brands, cost benefits, or network effects that others can’t match.
Understanding Fair Value and Price Discounts
Avoid overvalued aristocrats, even if they have a good dividend history. Companies like West Pharmaceutical and Air Products and Chemicals are good choices. They offer better entry points for long-term growth. Staying disciplined with prices helps protect your capital and ensures steady income.
Top High-Yield Dividend Aristocrats for Income Investors
When looking for the best dividend aristocrats, yield is key. These blue chip stocks have grown their dividends for decades. They also offer attractive yields to boost your income.
Amcor leads with a 5.87% forward yield. It’s the world’s largest plastic packaging provider. This means big income for shareholders.
Kimberly-Clark is next with a 4.93% yield. It has strong brands like Huggies and Kleenex. These brands bring in steady cash.
Clorox has a 4.37% yield and is growing. It aims for mid-single-digit dividend growth. It also keeps its payout ratio at 60%.
PepsiCo ends the list with a 3.94% yield. It has a 66% payout ratio over three years. It also grows its dividend by high-single digits annually.
| Company | Forward Yield | Key Strength |
|---|---|---|
| Amcor | 5.87% | Global packaging leader |
| Kimberly-Clark | 4.93% | Consumer staple brands |
| Clorox | 4.37% | Sustainable payout ratio |
| PepsiCo | 3.94% | Strong dividend growth |
About 40% of blue chip dividend aristocrats have yields under 2%. This shows that long dividend growth doesn’t always mean high yields. Look for a balance of yield, sustainability, and growth.
Wide-Moat Dividend Aristocrats Trading Below Fair Value
Looking for quality companies with strong advantages at lower prices is a great strategy. These three top picks have solid business models, good prices, and steady income. They are perfect for patient investors.
Clorox: Deep Discount Consumer Defensive Play
Clorox is a great value, priced about 30% lower than its estimated $163 fair value. It offers a 4.37% yield, making it a top choice for those seeking income. Expect dividend growth in the mid-single digits over the next decade, with a payout ratio near 60%.
The company’s wide economic moat comes from its trusted household brands. These brands are essential for consumers, no matter the economic situation.
Brown-Forman: Premium Spirits with Reliable Dividends
Brown-Forman, known for Jack Daniel’s whiskey, is another good deal at 25% off its $37 fair value. It has a strong moat due to loyal brands and solid distributor ties. The stock yields 3.30%, with dividend growth matching earnings.
Premium spirits are in demand, making your investment stable through economic ups and downs.
PepsiCo: Global Snacks and Beverages Leader
PepsiCo is 13% below its fair value and offers a 3.94% yield. It has kept a 66% payout ratio for the last three years, with dividend growth in the high single digits. Your investment gets a boost from its wide range of snacks and beverages worldwide.
The payout ratio is expected to stay in the low 70s for the next decade. This supports mid-single-digit annual dividend growth.
Healthcare Sector Dividend Aristocrats Worth Considering
The healthcare sector is a stable choice for your dividend portfolio. It includes companies that do well even when the economy is down. These businesses benefit from an aging population and constant medical needs, making them great for long-term growth.
Many healthcare companies are among the highest yielding dividend aristocrats. Each one brings its own strengths to a defensive portfolio.
Becton Dickinson: Medical Equipment Dividend King
Becton Dickinson is the world’s largest maker of medical and surgical products. It has raised its dividend for over 50 years, earning it the title of dividend king. The company yields 2.08% and is priced around $202, which is 25% less than its estimated fair value of $270.
Investing in Becton Dickinson protects your money from its narrow economic moat. This moat is built on scale and strong distribution networks.
West Pharmaceutical: Injectable Packaging Specialist
West Pharmaceutical is a leader in packaging for injectable drugs. Its 0.37% yield is among the lowest for dividend aristocrats. But, the company keeps its payout ratios between 20-30%, supporting sustainable growth.
West Pharmaceutical is expected to have a 13% payout ratio over five years. It trades 24% below its $310 fair value, making it a good choice for growth and its wide economic moat.
Abbott Laboratories and Johnson & Johnson Opportunities
Abbott Laboratories and Johnson & Johnson are two giants in healthcare on the 69-company aristocrat list. Both are great for long-term dividend growth strategies. They have diverse products in pharmaceuticals, medical devices, and consumer health, providing steady income through different market conditions.
| Company | Dividend Yield | Years of Increases | Economic Moat |
|---|---|---|---|
| Becton Dickinson | 2.08% | 50+ | Narrow |
| West Pharmaceutical | 0.37% | 30 | Wide |
| Abbott Laboratories | 1.93% | 51 | Wide |
| Johnson & Johnson | 3.15% | 61 | Wide |
Consumer Defensive Dividend Aristocrats for Portfolio Stability
When the market gets shaky, consumer defensive stocks are your go-to. These blue chip dividend aristocrats are in key industries that people need every day. They sell things like toothpaste and toilet paper, not just wants.
Kimberly-Clark is a dividend king with a 4.93% yield. Its big brand names make it hard for others to compete. It’s great for investors looking for steady income.
Target Corporation is another top pick with over 2,000 stores in the U.S. It grows by focusing on strategic private-label brands and updating stores. With a low price-to-earnings ratio and little debt, Target is a good value, even with leadership changes coming in 2026.
| Company | Yield | Sector Focus | Key Strength |
|---|---|---|---|
| Coca-Cola | 2.9% | Beverages | Global brand recognition |
| Procter & Gamble | 2.3% | Household Products | Premium pricing power |
| Colgate-Palmolive | 2.1% | Personal Care | Emerging market presence |
| Walmart | 1.2% | Retail | Scale advantages |
| McDonald’s | 2.3% | Quick Service | Franchise model |
These S&P 500 dividend aristocrats are very resilient in tough times. J.M. Smucker and Church & Dwight add to this defensive group. They offer stability that’s perfect for retirees looking for steady income. Their strong business models and market positions help them weather financial storms better than growth sectors.
Industrial and Technology Dividend Aristocrats to Watch
Industrial and technology companies are top choices for dividend income. They offer steady growth and consistent payouts. Let’s look at some standout companies that bring together tech innovation and industrial strength for reliable dividends.
Automatic Data Processing: Technology Dividend King
Automatic Data Processing is the only technology company that’s both a Dividend Aristocrat and a Dividend King. It’s a payroll processing giant with a 2.64% yield. Its dividend has grown by 10.5% each year on average from 2010. ADP keeps a 55-60% payout ratio, promising future dividend growth.
Trading at a 13% discount to its $297 fair value, ADP is a top choice for income in the tech sector.
Air Products and Chemicals: Industrial Gas Leader
Air Products and Chemicals leads the global industrial gas market. It has a strong economic moat due to high switching costs. This Dividend King yields 2.74% and is critical to industries like manufacturing, healthcare, and food processing.
Caterpillar and Emerson Electric Prospects
Caterpillar and Emerson Electric are industrial giants with decades of dividend growth. Dover Corporation adds diversity with its equipment, consumable supplies, and digital products. PPG Industries, Sherwin-Williams, W.W. Grainger, and Illinois Tool Works are also worth considering for your income portfolio.
Building Your Dividend Aristocrat Investment Strategy
Creating a solid investment plan for top dividend aristocrats stocks is key. You must choose between individual stocks and funds. Each option has its own benefits for growing your wealth over time.
Individual Stocks Versus Dividend Aristocrat ETFs
Buying individual stocks lets you pick the best companies for your portfolio. You can choose based on their strong fundamentals and growth. But, this method requires a lot of research and money.
ETFs are a simpler choice. The ProShares S&P 500 Dividend Aristocrats ETF (NOBL) tracks 69 aristocrats with low costs. Other good options include:
- Schwab US Dividend Equity ETF (SCHD)
- Vanguard Dividend Appreciation ETF (VIG)
- T. Rowe Price Dividend Growth ETF (TDVG)
These funds offer quick diversification across various sectors. They give you a share of big companies with a market cap of at least $13.1 billion.
Portfolio Allocation and Diversification Guidelines
Smart allocation is vital to protect your investments. Spread your stocks across different sectors to lower risk. Aim to have 20-30% of your portfolio in dividend aristocrats. This balance provides steady income without focusing too much on slow-growing stocks.
Common Pitfalls When Investing in Dividend Aristocrats
Blue chip dividend aristocrats are known for their steady income. But, there are traps that can hurt your returns. Even long-time dividend payers can cut their payouts unexpectedly.
Many investors think past dividend increases mean future ones are safe. Walgreens Boots Alliance cut its dividend by nearly half in early 2024. This was a shock, despite being a respected s&p 500 dividend aristocrat. VF Corporation and AT&T also cut their dividends, showing that even long streaks aren’t guaranteed.
Another mistake is paying too much for a stock’s dividend history. Many s&p 500 dividend aristocrats have high prices because of their reputation. About 40% of them have yields under 2%, showing that a long dividend history doesn’t always mean good income now.
Always check if a stock is fairly priced, not just its dividend history. Overpaying for a stock, even one with a good dividend record, raises your risk. Look for aristocrats that are undervalued, not just popular ones.
Analyzing Dividend Growth Rates and Payout Ratios
When looking at the highest yielding dividend aristocrats, it’s key to understand growth rates and payout ratios. These metrics show if a company can keep its dividend streak alive and grow payments over time. Investors should look beyond just the current yield to see if dividends are sustainable in the long run.
Sustainable Dividend Growth Indicators
Top dividend aristocrats find a good balance between growth and payout ratios. Leading companies show this balance through careful planning. For example, Clorox aims for a 60% payout ratio and expects dividend growth in the mid-single digits.
PepsiCo keeps a 66% average payout ratio and aims for high-single-digit annual growth. These companies reinvest earnings and reward shareholders, showing they can sustain their dividend streaks.
| Company | Forward Yield | Payout Ratio Target | Growth Outlook |
|---|---|---|---|
| Clorox | 4.37% | 60% | Mid-single digits |
| PepsiCo | 3.94% | Low 70s | Mid-single digits |
| Automatic Data Processing | 2.64% | 55-60% | 10.5% historical CAGR |
| FactSet Research | 1.53% | 20-30% | Conservative growth |
Warning Signs of Possible Dividend Cuts
Be cautious if a company’s payout ratio goes over 80% or if earnings start to fall. Companies without strong competitive advantages are at higher risk. Narrow-moat companies face more challenges during economic downturns than those with wide moats.
Historical Examples from Walgreens and AT&T
Looking at past failures can teach us a lot. Walgreens Boots Alliance cut its dividend nearly in half in early 2024, losing its aristocrat status after decades of increases. AT&T dropped from the list after spinning off WarnerMedia. These examples show that even long dividend streaks don’t guarantee future payments.
Your best dividend aristocrats for income should have reasonable payout ratios and strong competitive advantages.
Tax Considerations and Ex-Dividend Dates for Dividend Investors
Understanding taxes and when dividends are paid is key to making the most of your investments. Good tax planning lets you keep more of your dividend income. Also, timing your purchases right ensures you get every dividend from top stocks.
Understanding Qualified Dividend Tax Treatment
Most dividend aristocrats offer qualified dividends, which are taxed at lower rates. You’ll pay capital gains tax, not ordinary income tax. This could save you up to 37% in taxes, depending on your income.
To get this tax advantage, you must hold the stock for at least 61 days. This period starts 60 days before the ex-dividend date. Companies like Coca-Cola and Procter & Gamble offer these tax-friendly dividends.
Timing Your Purchases Around Ex-Dividend Dates
The ex-dividend date is when the dividend payment is decided. Buying on or after this date means you miss out on the dividend. You must buy at least a day before to get the dividend.
Many investors reinvest their dividends to grow their wealth over time. This is great for retirement accounts where taxes are lower or non-existent. For taxable accounts, think about your tax bracket when choosing between dividend income and growth stocks.
Conclusion
Building wealth through dividend investing doesn’t mean you have to follow every market trend. The 69 dividend aristocrats are some of the most reliable income sources. These stocks have shown they can provide steady, growing income that fights off inflation. You can trust these companies to keep paying dividends, even when the market gets shaky.
There are many great opportunities among long-term dividend growth stocks that are underpriced today. Companies like Clorox, Brown-Forman, and West Pharmaceutical are good choices for patient investors. Even though they might not get a lot of attention, they are experts at making consistent income and growing dividends.
Choosing dividend investing depends on what you like and what you can do. The ProShares S&P 500 Dividend Aristocrats ETF (NOBL) offers a simple way to diversify across all aristocrats. Picking individual stocks takes more work but lets you focus on specific chances. Either way, these stocks are rare in today’s market because they offer dependable income growth from proven businesses. Start with the top dividend aristocrats that fit your goals and watch your income grow over time.